The US dollar witnessed a dramatic movement on the weekend, and today it appreciated sharply against major counterparts as violence in the Middle East sparked safe haven assets like the dollar. Adding to this, a blowout U.S. jobs report gave the greenback a further leg up.
The currency reacted volatile; it jumped to the high of 106.9740 and retreated to 106.317, after the US monthly jobs data. The US Nonfarm Payrolls (NFP) report, meanwhile, reaffirmed bets for at least one more rate hike by the Federal Reserve (Fed) in 2023 and weighed on the precious metal.
Additional details of the report, however, revealed that wage growth remained moderate during the reported month and eased inflationary concerns, which might force the Fed to soften its hawkish stance
Adding to this, risk sentiment increases after Israeli forces clashed with gunmen from the Palestinian group Hamas over the weekend, hours after the militants launched a surprise attack on Israel in the deadliest day of violence in the country for 50 years.
Looking ahead, FOMC meeting minutes and the US consumer inflation figures are set to release this week which will be the next big jitters or the dollar.
Technical Outlook
The dollar index witnessed a volatile move on Friday. It jumped to day’s high 106.9740 and retreated, settling at 106.1010 down 0.22%.
The recent price action resulted in formation of a high wave candlestick, following the three consecutive day’s falling stick, which is indicating control of sellers from here. In the near future, the dollar index appears to test its previous high 106.94-107.35 very soon.
On the downside, crucial support is seen at 105.85 and below it only the dollar index will retreat towards 105.35-104.80.
Looking to the ongoing geopolitical tension and Fed higher rate concern continue to support safe haven currency demand.
